A Bit About 5.2 Professions

... and why I'm probably right.

I wanted to make this end of the week's editorial a roast, but I just can't do it when this crap is staring me in the face.  There is a lot of speculation going around as to what's the best prof-comp to have for this next patch purely because of PvP gear.  Additionally, Blacksmithing gets a revamp and it's time to dispel the BS in BSing.


What we know so far...

All 5.2 Dreadful PvP gear recipes and epic patterns are entirely discovery based*.

Blacksmith - Discoveries will be made via Thunderforge research, opened by the new daily chain and completely dependent on your server's idiots to DO THEIR DAILIES.  It's then 40 days to retain all the recipes.

Leatherworking - Discovery based again!  You will have to locate one of the two Magnificent Leather recipes that will use either 20x Prismatic Scales or 20x Exotic Leather, with the cooldown being shared.  With one leatherworker you are looking at roughly 64 days to retain all the recipes.

Tailoring - Discovery based!  This one is tied to your Imperial Silk cooldown, and will take 40 days to retain the recipes.

*Note that my counts are a quick count off MMOC's database

This is a widely anticipated introduction, but my only real question is...  why would people just now be getting into PvP gear crafting?  PvP gear was always a good seller for me, even in Wrath when the gear was a joke.  Where were you during 5.0-5.1 making Contender's?  The rabble was cleared out of that market far too quickly, and I'm on the largest AH in the US.  For almost all of 5.0-5.1 I enjoyed excellent sell-through on a daily basis.  Of course, it's boring, like a job, don't tell me to do something that takes time and effort.  I get it.

The bad news - people are going to be doing this purely to get the new epic raid patterns.  We're now not relying on bleeding edge guilds to cough up the extra recipes they don't want or need.  There's no solo farming Firelands to get each pattern to drop.  Rarity of these patterns is now gone and your ability to make them is now based on RNG and not gold.  Within the first day they will become available on your server no doubt.  It's sort of like when Inscription had a brief rollout where only one person on the server had the penguin glyph, and the guy was charging 5k for it, only to see none of them sell at that price and before long everyone was posting them at 10g per.  Regardless, people will want to learn all those epic patterns for when Haunted Spirits start appearing.

No question this will cause a short lived surge in pricing of Exotic Leathers, Mag Hides, and Windwool cloth.  Did you remember to stockpile several thousand stacks of leathers/scales at below market prices before everyone is tripping over themselves to make Mag hides?  Did you get your cloth together for a month of cheap cooldowns?  I know I did.  If you want to have some fun the first week, reset pricing on Windwool and Exotic Leather.  Just buy it all and repost it at 10-20g per.  The sheer amount wanted initially is going to tick some people off who didn't plan ahead.  Skinners will very well enjoy a windfall.

I've now got 3 LWs, 3 Tailors, and working my 2nd BS up.  Technically, I should have all the new recipes within 1/3 the time of a person with just one Tailor and LW, and half the time of someone with one BS.  

So Who Hoarded All the Ghost Iron Ore/Bars?  Show of hands, please?

Blacksmithing gets a change to level to 500 using Ghost Iron for projects.  For those following the people screaming "Buy all bars and ore!  zomgwtfbbq!!!1!one" let me crush your dreams of easy profits and wake you up to the cold reality of what taking it in the derriere feels like when you don't think things through and analyze and mindlessly listen to the Mad Money podcasts/streams/blogs telling you what to do like some zombie.  Like all things WoW, it's going to depend on your server activity.

For the past month people have been going gaga snapping up all the Ghost Iron Ore and Bars they can because they heard from someplace that leveling Blacksmithing to 500 was gonna use these and they could take advantage.  The thing they didn't hear was that it was about 9900 ores to get to 600, and that it will be used primarily for those situations where Copper, Tin, Iron, Mithril, Thorium, Fel Iron, Adamantite, Cobalt, Saronite, Obsidium, and Elementium are not widely available or decently priced.  In order for this to work, three things must happen:

1)  People have to want to level a blacksmith.  What's the motivation?  15 days of cooldowns to make 476 weapons, which people will have replaced in LFR by the time you hit 15 bars?  Transmog to TBC models that weren't that awesome?  Or are people magically going to want to get into the epic crafting market?  Meh.
2)  All of the previous ores HAVE to be higher priced than the Ghost Iron alternative.  Given the hoarding that's been going on (yes, hoarding, calling it stockpiling is an affront to the professional AH crowd everywhere) people are counting on seeing Ghost Iron at release level prices and counting on them to sell at that.
3)  It relies on people like me not to put pencil to paper and whip out my spreadsheet and do a quick analysis.

Oh wait, I just did that!  Using WoW-professions.com's basic material requirements, I threw this together...  a visual illustration of the material costs from 1-500, which is where the "catch-up" mechanism is supposed to help out.  Beyond 500 obviously requires GIO so I'm not going to worry about that.

These numbers come from my server, Wednesday February 27, about noon prices.  Bottom line here as you can see is roughly 9,270g to hit 500.  If I wanted to level a Blacksmith today (already doing it) I would spend a quarter of a day's revenue.  Pretty good deal, so why's this catchup mechanism being implemented like this?  To keep people from having to farm old world mats too easily?

Let's look at 1-500 using Clampz's nice illustration, but with the costs filled in.  Same source of pricing as above:

Buying those Ghost Iron Bars you spend 23k, and smelting them yourself you save TWO THOUSAND GOLD!  What a bargain, eh?  Rather than waste time buying out all those lesser mats, you can save yourself the trouble next week for an extra 11,902g.  This is using today's pricing, so imagine when you try to boost those prices an extra 1-2g per ore.  Do you think people will be buying GIO to level Blacksmithing at that point?  Uh oh, I think I hear the stomachs of those that hoarded GIO turning.  I hope you didn't convert those things into bars!

Oh hey, what would the price need to be right this second to where using entirely GIO throughout breaks even with old mats?  Well, let's see...

98 silver per ore.  1.96g per bar.  Anyone seen these prices on their server?  If so, consider yourselves lucky.  We touch 1.5g every so often, but that was a long time ago.  It is possible that we could reach these lows again should people lose it and there's a mass rush to get rid of the stuff to get their gold back.

This catchup mechanism is great if you're on some backwater server where lesser mats are never available, or you hit a part of the leveling process where mats are egregiously overpriced as I mentioned.  Otherwise, this cannot be sustained unless you prop the lesser mat prices up on any server in order to make GIO more attractive.  Do you think Rough, Coarse, Heavy, Solid and Dense Stone are gonna magically go up in price?  The most expensive GIO option happens to be between 300 and 500, and having leveled another BS recently I found it very cost effective to go the Fel through Elementium route since I was comparing it.  

Blacksmithing still only needs 400 for the sockets anyhow, a full 200 levels don't need leveled unless the person is looking to use it to craft current gear.  Sure there are completionists out there that will go the full stretch, but seriously, that's wishful thinking.  I deal in reality, and reality is most people will probably stop when they get the benefit and see what the crafting requirements will be for those "godly" ... new ... weapons... of ilvl 476?!?!!  It's pretty cool in a world dominated by LFR today, people have the option to purchase an item that's not 483.

But won't these people just be able to convert those items to gems and enchanting mats?  Sure, if they have a jewelcrafter.  But consider something else, we have no catchup gear.  LFR is only boosting the odds of retaining gear, and Blizzard closed the store on free gear for dungeons.  Rep gear still requires rep.  People actually stockpiled uncut gems for the patch because this is what they were told to do during Cataclysm, even though they missed the memo about MoP not having Cata catchup mechanics.  It's completely possible we'll see an absolute cratering of gems and enchant mats with all this idle GIO laying around today, so who knows? 

I do know I'm snagging all the cheap GIO I see when the markets flood, because I frankly have a use for it for the next patch.  Bars can be transmuted for certain, but will we see a flood at release?  Will people use the GIO method without looking at the costs?  Probably, there are enough idiots willing to hand money over for anything new.  I also know that if GIO and GIB sales crater, you're going to see Living Steel fall through the floor, as if it hasn't done so already.  There's no real need for it except in the new epics, which don't require a truckload.  Belt buckles will certainly be in demand but will this apply enough pressure to cause Living Steel to go up a lot in price?  Possibly, but that's a bet, and I tend to deal in sure things.

Conclusion

When someone tells you to buy something, or they blindly tell you that a price is going to go through the roof, do the research.  Think about it.  Put pencil to paper.  When someone tells me a price is going to go up, it's speculation until I see cold hard numbers or evidence.  What can I say?  I like to promote critical thinking, it's what keeps us at the top of the food-chain.

Thanks for stopping in!

Thought for the day - When everyone plays, nobody wins.

Further Application of Spreadsheets

Last Tuesday I went into why spreadsheets were an important vehicle in decision making and long term profit planning.  This week I'm going to gloss over something I developed using my spreadsheet several months ago and it's something I don't mind people seeing since it's just an example of critical thinking and what I promote here.  Since I wrote it a while ago, I figure this article flows well in my discussion.

Token Cost Normalization Method

I love cooking, and always dealt in this market from Classic WoW through present day.  Even in Cataclysm you could make a healthy profit just flipping fish.  I'm fairly certain a lot of people out there are on servers where cooking is flat out not profitable anymore, and it made me a bit upset after release to see my server seemed this way.  The only way many approach it is to fish some mats, kill lots of different mobs, or grow the veggies wasting valuable farm spots.  You could also potentially engage in the Ironpaw shuffle as presented by Elen, and here's my spin on it and my system.

This is a method for always making cooking high end recipes profitable.  As mentioned the vast majority of recipes are not profitable, so that means we need to establish a baseline cost.  The following is a snippet of my personal spreadsheet from its Cooking section showing a typical day using TUJ data on a Monday:

Anything above 20% ROI is flagged here, although it doesn't mean I'm going to necessarily make it.  My spreadsheet, for convenience sake, compares what I'm about to demonstrate against purchasing the materials outright.  That means I compare token pricing to buying materials for direct use, but we're talking strictly tokens here.

What I tend to hone in on are 300 stat recipes and other reagents used in cooking (which makes it very similar to Elen's shuffle).  I am specifically targeting the raiders on my server that understand having 25 more to a stat buffs their raid a healthy amount, provided most everyone is using 300 food.  There are quite a few of them to say the least that min/max.

Normalizing the cost of materials

What I am doing is guaranteeing my ROI on every food sold.  For certain a person could just buy random materials that go into the craft, or buy them up on raid days and make their own food (which can be expensive) but like I explained before, I buy supplies even if I don't need these supplies.  Using this system, it doesn't matter if I'm buying Jade Lungfish for 1g a piece or Raw Crab Meat for 2g each.  Each of the materials are collected and eventually turned into tokens and each of those tokens will have a fixed value of no more than 40g or 50g each, or whatever I want to make them.

For our purposes here, let's say I want to make each token worth 50g each, which means my raw materials (in stacks of 20) can be no more than 2.5g each, and this is demonstrated on my spreadsheet and returns over 20% ROI for the crafts I engage in.


I can then convert these tokens to anything I wish to make in cooking, so my spreadsheet accounts for the cost of the primary recipes that people will probably want to buy:

300 stat food - 4 tokens - 200g cost - 40g cost per food
275 10-man feast - 7 tokens - 350g cost - 70g cost per feast
275 25-man feast - 13 tokens - 650g cost - 130g cost per feast

So if I assign a fixed maximum cost of 40g per 300 food, I can buy endless materials of any fish or meat off the auction house converting them to tokens, and not have a worry about anything beyond the fact that my costs are always fixed to a maximum of a 40g cost.  In other words, if I have 1000 tokens on my turn-in character, I have 40000g in reagents available for 300 stat foods, powders, flours, or soy sauce.

Do these sell?  On my server they do.  Tuesday through Friday I commonly sell a healthy stock of food off, with Mogu Fish Stew being undoubtedly the most popular.  Other recipes sell sparingly, but given this was written in January and lots of people are phoning in the raids, it's just important to have the item available.

As you can see, my ROI is better than 20%, and I consider this a bonus.

Since meats only grant 5 per token, you can reduce the costs even further by keeping a few stacks in reserve to craft with since 15g is less than 40g.  This means if you can acquire cheap Tiger Gourami, Jewel Danio, Emperor Salmon, Giant Mantis Shrimp, and Redbelly Mandarin, Mushan Ribs, Raw Crocolisk Belly, Raw Turtle Meat, Raw Crab Meat, and Raw Tiger Steak, and you don't mind stockpiling them, by all means go for it.  You will need to balance what is an appropriate stockpile and what you will be converting.  I tend to keep enough of various meats in stock based on my own experience, allowing me to produce a week of inventory while trading for the missing veggies and reagents.  Either way, my costs are always below a fixed normalized amount of gold and I like having a revenue source that's on autopilot and doesn't require a lot of mental acrobatics to keep up with.

Can you have too many tokens in stock?

In the reagent market, this also works quite well for 100 Year Soy Sauce still, since these are undoubtedly the easiest items to trade up for besides Rice Flour and Black Powder (which also sell sparingly).  People buy them for leveling up cooking, making quick raid feasts, and making their own 300 foods since I know many people still grind/grow their own mats.  I keep about 100 Soy in stock for posting at any given time.

Conclusion

This is just one more application of where a spreadsheet will help you in critical thinking ability, as opposed to simply checking what to make via an addon.  Since my costs are locked in, I can easily set TSM up for any of these to only post when I'm going to see a decent profit, and I can restock quickly with a few minutes in Halfhill.  I tend to keep about 100 of the different foods in stock at any given time, and if they post, then they post.  Because I scour the AH for the best priced raw materials normally, I know point blank anyone posting under me is farming the materials themselves or flat out not thinking about their costs because I tend to work this market on a daily basis.  If someone posts below my own cost, I will potentially buy them out - although this rarely happens because then you know you have a real idiot on your hands.

Owner's Manual

Step 1:

Hit up TUJ or Wowuction and find out what your market prices are.  Determine your cost and ROI from this data because this will determine what your token prices will be fixed at.

Step 2:

Retain the recipes.  I have all recipes listed here that you should have access to once you have leveled all "Ways" to 600.  Specifically:

Sea Mist Rice Noodles
Steamed Crab Surprise
Mogu Fish Stew
Chun Tian Spring Rolls
Black Pepper Ribs and Shrimp

Each of these recipes will produce 5 of each food per craft.

Step 3:

TEST THE MARKET.  Don't just jump into this.  Make 1-4 batches of each, see how long it takes to move them.  If you see good results, then this may be a decent stream of revenue for you.  It's not get rich money, but just another avenue of revenue.

Step 4:

Acquire the materials off the auction house, send them to an alt parked out in Halfhill.  It's best to use an 85-89 you're still leveling since you'll receive the experience for turning in the baskets*.  If you don't care about that, you should send them to your cook.

Step 5: 

Stock up and sell.

*It should be noted that you can save yourself a lot of time setting up a macro for converting the baskets.  The addon Turn In will make the turn in of the baskets a joke.  I personally keep about 20 of each basket in my bank and just spam the macro, then turn them in when I'm done.  I also do it whenever the mailbox is packed with foods.  Another macro helps with the exchange.

Margin Call - Week of 2/17/2013

Decent week here for the week before the week before the patch.  I made a rather sizable investment ahead of this next week (as you can see) and I think I'll cash in after the release, we'll see.  If you haven't kept up with the week's drama, apparently Blizzard has been hammering the bot users causing a bit of a problem with the availability of herbs and ores.  Isn't it interesting that there was also a sale this month on new copies?  Coincidence?  Or just excellent quarterly planning?

Normally I see several hundred stacks of underpriced ores during the week, but this week I was only able to snag a handful.  This is why stockpiling works, it will prevent interruptions of supply and allow a person to be competitive in any market.  I'm also fairly certain they'll be back up and running within a few weeks, if they aren't at it already.

Tip of the week:  My numbers are always for example purposes, I could be using higher or lower numbers.


Thanks for stopping in!

Why is "getting to gold cap" so important?

For certain, there are goals to achieve in gold grinding.  Everyone wants to have that gold cap number.  1 million dollars!  er... gold!

Years ago, I recommended to Warcraftecon that they put up a Hall of Fame and an interview (I still have the email chain saved on my Yahoo account) for people who hit the magic digits.  Back then it was 214,736g and change.  Today that's a really solid day's pay.  Today's "Gold cap" is widely considered to be 999,999g 99s 99c, the maximum amount any one character can hold.  Not that you're a poor person if you have this amount, you can now bid the maximum amount on the BMAH.

It's not like a million gold is hard to come by either, my monthly sales are well in excess of that, and my liquid is well over this amount (for the second time).  There are a million ways to get there, too.  Here's a short list of a few ways:

* Camp glyphs/gems/enchants like a fiend
* Do 20 dailies at level 90 per day for 2,015 days (yeah, get started on this one)
* Farm herbs, skins or ores until your fingertips bleed or your brain gives in
* Flip some high end TCG mounts for a while
* Beg in trade for gold (it does work, some people actually get their gold this way)
* Aggressive auctionhouse tactics
* Develop an industrial complex of manufacturing, monitor it religiously, and reinvest your profits (I like this one)

But what is really gold cap?

Like all things in WoW, as time has passed over the years, inflation has actually made the grind easier.  Thanks to massive amounts of gold infusion, players gain more and more liquidity opportunity with each expansion.  Let me illustrate my point.

In Vanilla/Classic WoW, acquiring the 1000g to buy epic mount training was considered a massive amount.  How long does it take you to acquire 5k to get flying with no rep bonus today?  Mobs didn't drop a ton of coin, there were no dailies, and if you wanted to grind gold you looted everything and were happy to get 1g+ greys.  The highest amount I heard of back then was a friend of mine who put up over 100,000g.  This was at a time when bleeding edge guilds were selling Naxx gear at 1-2k per drop.  What are they selling mere runs for today?  (Not an endorsement)

During TBC the actual character gold cap was discovered to be 214,736g.  They introduced dailies and easier ways to infuse gold into the game with larger raid boss gold drops.

Wrath brought us the saronite shuffle (Thanks Z-Man for coining that awful word on JMTC, in case anyone was wondering who came up with the word) and for the first time you had a viable way to process a basic material into several different avenues.  Enchanting was allowed on scrolls.  Massive amounts of dailies again.  Guild banks were practically unlimited.  Stokpile hit a million gold and then gave it all away for a basic ICC run.  The character cap did not change until...

The release of Cataclysm acknowledged that 2,147,360g across 10 characters was not enough, unless you owned guild banks.  And that brings us to where we are today.  I casually put together 1.6 million liquid gold and then blew it all before taking a break from the game.  Stokpile spent a few months putting 2 million gold back together.  Acquiring a million presented no challenge because I started seeing it being hit very commonly among people and it became a "meh" amount.

MOP is now different.  And here's why:  A million gold is still a lot of gold, but it's now a common amount of gold.  Like what happened to Dr. Evil above, Tim Roberts laughed his ass off at him because it really isn't a lot of gold anymore.  It's far too easy to collect a million in a month (been there, done that, I will sell you the T-shirt).  There's a ton of gold out there.  And if you're stopping at a million, you join the common people, and why would you want to be in that neighborhood?  I mean, they still drive their cars themselves in that neighborhood.  They have their lawns mowed, not manicured. 

Therefore, I propose the new "gold cap" terminology to be defined as follows:

Gold Capped:  11 characters, 11 million gold.
Realm/Server Capped:  11 characters, 11 guild banks, 22 million gold.
Account Capped:  50 characters, 50 guild banks, 100 million gold.

There, now you have something to work towards.  So when you say "I'm going for gold cap", this is what you mean.  Otherwise, you're just grinding to a million and are just another rich dude/dude-ette. 

Thanks for stopping in, but I have to go get Gold Capped.  Account Cap comes later.

An Ode to Spreadsheets

This scene came to mind when writing this.

That's right, WORLD (of Warcraft) DOMINATION!

I'm talking today to the people out there that like to think for themselves, experiment, and don't just want to compete but to crucify the auctionhouse without camping.  Back before such great addons like TSM and Auctionator (or even the introduction of TSM's predecessor Quick Auctions), making gold required you to figure a lot of things out on your own.  Since gold making became as simple as scrolling a mousewheel for the masses, or downloading the new shuffle spreadsheet, or visiting some blog/forum and reading what everyone else was doing the lost art of developing a spreadsheet and putting pencil to paper has been tossed aside.

This is, at least, for the vast majority of people working the AH today.  I would take a wild guess and estimate that 0.0001% of the people actively working the auctionhouse today are using spreadsheets they developed and maintain.  I happen to know of 4.

Of course, I'm not talking about using spreadsheets developed for shuffling purposes.  Those spreadsheets are widely available and used by everyone camping gems/glyphs/enchants today.  The people that put those together did a great job, sort of like Walmart bringing big city deals to rural communities.  This is a different form of spreadsheet development, as making your own will enhance your efforts further as you try to discover new markets, tricks, and paths of least resistance.

I came into WoW developing my first spreadsheet before I even hit level 60.  In a previous game I developed my own spreadsheets, and the trek to 60 back then was a 2 month ordeal so you had lots of time.  When I started playing Rift, it was the first thing I did.

We didn't have sites tracking prices very effectively (Thott and later Wowhead) so you had to do it in game and live to look up everything to plug and chug.  Appending to what I went over last time in JIT vs. Stockpiling, this was JIT in it's worst form.  You had to track those prices yourself, typically with Auctioneer data.  It was usually bad data because you were only seeing prices from the times when you scanned so you couldn't see that prices dipped overnight because the CGFs were out in force.  Thanks to API data and the efforts of Erorus who pioneered the science of logging in and checking every single hour of the day on most every server, Blizzard relented and started releasing the data.  Today's information is now good enough to be able to track market prices within a very tight margin of error, typically within 5%.

To develop a spreadsheet, you simply plugged in all the materials need to make the various crafts, and then referenced their construction to their material prices.  You then added them up, and could manipulate the data however you wished.  People using TSM today will scream "TSM does this!"  Yes, in a very basic format.  It culls upon the AuctionDB information, and then the addon determines profitability and you go buy the materials and make whatever percentage TSM tells you - provided material costs don't change rapidly.  Again, this is still JIT manufacturing and not long term planning.

Remember what I said in JIT manufacturing, it's great if the product is high turn.  You make your item and if it sells before pricing deflates or someone undercuts because they're using cheaper mats you didn't acquire then you win.  Stockpiling is projecting your profit consistently, JIT in WoW is arriving at a profit or a loss.  Spreadsheeting is used heavily in concert with stockpiling because you will determine your costs and profit of a product before you ever make that product in an effort to make a repeatable process.

Here is a sample from my own spreadsheet (part of it at least).  My spreadsheet today utilizes TUJ's data and puts everything into a neat and organized format.  My costs and prices are directly culled from the price data, and I then calculate profit based on:

(Sales Price x 0.95%) - Cost of Goods Sold =  Profit

My Return on Investment (ROI) is calculated by my profit over cost.  I also have a function that determines if the item is something worth making if it meets my ROI requirement.

Of course this is basic MoP information above, my spreadsheet includes every single recipe in the game that can create a predictable item, I don't include randomized items unless I am specifically analyzing them elsewhere within my spreadsheet.  I deal in consistent and expected results, not random chance.

If my spreadsheet tells me I should make something, I will then explore the materials behind it to insure that they are within good tolerance.  Let's take a Contender's piece for example.  I want to know WHERE those numbers are coming from, not simply that it sees an opportunity for profit.  I have each individual material set up in a separate part of the spreadsheet for my reference as such:

From this data, I'm able to determine that Ghost Iron Ore was probably used in the cost calculation since it's cheaper, but GIO is also much higher than it's historical price.  I know I've seen it cheaper, let's confirm with a quick visit to TUJ.

And there it is, the most recent low is showing 1.74g Market Price.  Since I want to make Contender's gear, I will now begin stockpiling all Ghost Iron Ore, whether I need it or not, below about 1.75g and crafting my Contender's gear with it.  I will develop purchase history and determine if that market price is accurate, since my server has been known to be far lower at times and TUJ uses algorithms to determine Market Price which have a margin of error of about 5% either way.  If I am acquiring too much ore, I will reduce my acquisition price by 5-10 silver, and fine tune it from there until I am able to hit my requirement of a 30 day supply for this material.  If I am acquiring too little ore, then I will increase my tolerance 5-10s per ore.

Because I also use GIO for engineering and jewelcrafting, it's important to closely monitor the amount I have on hand so as not to get into hoarding.  If I am overstocked, I will reduce my price further so as to use up some stock, but then increase it later when I'm needing more supply.  I will then make a habit of revisiting my spreadsheet about once a month, or whenever I see a discrepancy in the market.


This is not the same as if you simply go through TSM to make things.  While TSM does a great job for high turn items, actually planning your profit out via spreadsheet will give you longer term consistency and profit.  Remember, this is the reason you stockpile as opposed to engaging in JIT production.



Holes in the Market

Spreadsheeting isn't just used for determining profitability, that's just one aspect of it.  I've got every single recipe that is reasonably predictable in my spreadsheet.  If you were to try this same tactic in TSM, you would have a ton of things on your screen, and it would make it more difficult to plan accordingly since doing this same thing would make your UI a mess.

The reason I work so many markets is that I have poured over my spreadsheet looking for new opportunities.  I set my ROI to 20% minimum, and see what lights on the Christmas tree light up with MAKE.  Prices change all the time because the data used is only as good as that minute's pricing.  Sometimes things get overlooked, and maybe there is a niche I'm missing out on.

I'm able to sandbox any product simply by adding it to my sheet.  I can calculate the cost based on TUJ data, or if I am currently busting ore for my enchanting materials and can produce at a lower price, I can calculate my actual costs, which gives me a clear advantage over those merely looking at the basic materials on the auction house.  If I need to adjust the price of Spirits of Harmony, or if I run across a path to a product not captured by TUJ (there are a few), I can verify.

A good example of this was discovering that LW bags were still profitable on the server.  For a long time these items never lit up.  It wasn't until about 3 months ago that they finally began appearing on my radar.  I developed some trial stock, posted, and was able to determine that their prices were coming in exceptionally well and they were moving.  I then went through my standard process and now stockpile the materials and have a 30 day stockpile.  Materials today are 4x my price, so I get to cash in because I did proper planning and thankfully there's a market shortage.  JIT crafting loses again!

In a future post I'll go over another application of one of my spreadsheet efforts and show you my technique for cashing in on raid days.  Because spreadsheets allow you to manipulate and play the "what-if" game, I was able to find certain tricks to make one profession even more profitable.


Conclusion


It's not exactly rocket science, but it is an art.  Utilizing your spreadsheet is purely for long term planning, and not being a person merely working for the day. 

If you've seen my sales volume, and compared it to my purchases, you know how much gold I'm making.  I've got each market fine tuned to be consistently profitable using my method, and I don't have to post but 2-3 times a day to see very aggressive revenues.  There's no camping here, I'm not fighting 10 others to race to the bottom.  If anything my prices persuade people to keep camping and grinding glyphs, gems, and enchants.  I can compete and do what I want to do in the game, and my friend list is full of actual friends, not competitors I am having to watch because I engage in poor planning.

Applying a spreadsheet distances you far ahead of your competition and allows you to reason why to do things.  And that leads me to this week's tip:

Tip of the Week:  Nobody ever got rich doing the things everyone else does.

Margin Call Week of 2/10/2013

I hope your week was better than mine.  It's my fault, I had other things to do this weekend, one of them being to get a monitor to the shop in between everything else going on.  I'm not that thrilled about the results for the week given last week, but I didn't post but once on Saturday and Sunday, and the entire weekend was apparently slow anyhow.  Oh well, maybe next week will be better because this week was bordering on awful.

Thanks for stopping in!

What does Zerohour do?

Updated 3/8/2013

So what markets do I work with on one of the largest auction houses in the world?  Why, all of them worth doing!  I run one of the largest production accounts on Illidan currently gearing everyone and every guild that people won't do for each other.  The consistent money in the game is supplying the war efforts (Arms Dealer) since there's no shortage of people looking to improve their character quickly and shovel their coins my way.

Blacksmithing:
Living Steel Belt Buckle
Epic 476/496 armor
Masterwork
PvP gear
 
Leatherworking:
Epic 476/496 armor
Leg Armors
PvP gear
Specialty Bags

Tailoring:
Bags - 16 through 28 slots
Epic 476/496 armor
Leg Armors
PvP gear

Enchanting:
Sha Crystal Enchants
MoP Enchants
Cataclysm Materials
Wrath Materials
Wrath Enchants
Burning Crusade Materials
Classic Enchants (BOAs)
Illusion Dust
Vanilla Essences
Dream Dust
Vision Dust
Strange Dust

Jewelcrafting:
MoP gems (posting 1 time a night generally, 2-3 on resets)
MoP blue rings and necks
Cataclysm blue rings and necks
Wrath epic gems
Adamantite Bi-product

Engineering:
MoP scopes
MoP pets
Cataclysm pets
Vanilla pets

Alchemy:
MoP buff potions
MoP flasks
Transmutes of various types (gems and metals primarily, elements not anymore)

Inscription:
Glyphs (barely)
Shoulder enchants
Card making - I do not engage in deck trading due to time investment

Cooking:
MoP reagents
300 buff food
275 buff food


I'm going to go over the logic behind each of these and how I determine why I chose these in coming threads. 

As you can see from my past screenshots (and today's), I tend to make lots and lots of revenue off these items and they are definitely something that takes a bit of effort on your part to put together.  I spend my gametime at expansion releases leveling characters and retaining recipes as fast as possible, which allows me to hone my system and begin seeking raw materials at the best possible price.

Niche Marketing:
Rare recipe flips
MOP quality rare flips
Material resetting


Current setup:
Lots of characters - 10 x 90
Tailor/BS/LW are all at 90, with relevant reputations and recipes
4 x Enchanters, 2 with relevant reputations and recipes
3 x Leatherworkers
3 x Tailor
2 x Blacksmith
6 x Alchemists, all transmutation spec
4 x Guild Banks, all 6/7 tabs
Second Account

Addons:
Tradeskill Master (no, really?)
Auctioneer Suite
Market Watcher
Bagnon
Bankstack
Titan Broker: TradeCooldown (I updated it for my use)
Titan Broker: Cashflow (best gold-flow tracker available)
Dumpster


I am unknown on my server by design - I have my reasons.  People do not know me as Zerohour, nor do I seek any attention in the official forums, trade, or even amount the guild I manage.  I don't even have a character with my avatar/handle in it.  Most guild friends know me by my real name, and nobody knows I work the AH religiously.  The only people that know are long gone from the game and you. 

Margin Call, February 11, 2013:

 

A very nice week considering we're a few weeks from patch, even though I wasn't able to pick up a helluva lot of deals on the purchase side.

Just in Time (JIT) vs. Stockpiling

I've already told you about the Investment Mentality, so maybe it's time to share with you my core philosophy on how I create things for sale at a consistent profit.  It's my hope to get you to apply this previous discussion to what I'm about to talk about.

Just-In-Time (JIT) Manufacturing

This term comes from the real world and is commonly seen in accounting and manufacturing.  What this basically means is that you do not maintain a surplus inventory of your raw materials, and all materials used in the process are ideally provided at the time they are needed in the process.  Hence, "Just In Time".  It's commonly considered to be the most efficient means of production, allowing you reduce overhead and carrying cost.  When a part is needed, it's simply taken off the shelf, and when inventory depletes to a certain state another order is made for more materials.  The efficiency of the process gets into lead times, personnel, availability, etc.  For any organization running at maximum efficiency, ideally you have your orders in place ahead of time and only take delivery of the materials at the last possible moment.

Sounds like a smart plan, the Japanese implemented this system in their auto facilities and have almost perfected it.  It took a great amount of finesse to get it to work properly, but the Japanese being who they are developed a system that almost destroyed the American manufacturers during the 1980s.

In Warcraft

You are using this today if you are determining what to craft via Tradeskill Master.  When you queue up a product for crafting, you have to either pull from your inventory or make the purchase of those missing parts directly from trade or the auction house.  It seems simple from a bird's eye view, the system determines based on certain parameters what's profitable and you craft from there.  Further, you don't waste valuable inventory space with materials you don't need, most things are readily available daily, and all is right in the world.

This system is decent if you are newer to goldmaking and have a limited budget from which to draw your materials.  Further, what you craft daily is completely determined by the addon, and it doesn't take anything into account other than the day's trading price or market value.

My main argument against this system is that it turns you into a Walmart of bargain basement goods and items that you could possibly lose on.  If you don't care about losing gold on something, then obviously your time is worth nothing and you should stop reading right now.

JIT works wonders in the real world where you have overhead (material handling, physical space, management), cash flow considerations, decay, shrink, and taxation on the products used in your process.  Further, it's really a means of improving quality of work, and extracting every last dime of productivity from a workstation.  If this was the real world, I would advocate this but JIT is also heavily criticized for possibly being subject to the interruption of the supply chain - through scarcity, time delay, shipping loss, and most important price shock.  Further, this system takes forecasting heavily into account, so if you cease purchasing a product at some point you are engaging in inventory management, thus JIT.

When you make a product based on what a simple algorithm tells you to make (A-B=C) you run the gamut of being at the mercy of the market that day.  The prices you purchase materials at, the prices you sell them at, and your profit/loss have the ability to change drastically.  If you are on a very large server as mine is you can see prices swing wildly within just an hour.

This is not to write off JIT from Warcraft entirely.  This system is perfect for those with limited resources and only deal in the foolproof markets where goods are high turn but low earn:  Glyphs, Gems, Cheap Enchants, Potions/Flasks.  Note:  These happen to be heavily camped for a good reason.  You can acquire your basic materials and have a reasonable expectation that you will be able to sell through your servers demand within 24 hours.


Stockpiling

In a previous tip, I stated that you make gold when you buy, not when you sell.  If you aren't already doing this, then let me explain the logic behind adding this to your arsenal.

When most people talk about stockpiling, what they really mean is hoarding and waiting for a patch to bring prices back up.  In the realm which I play, this is not stockpiling and typically results in a person holding dead assets and often breaking even if they speculated wrong.  As I went into in my discussion of the Investment Mentality, as you acquire wealth you always want to reinvest as much as possible back into the raw materials so as not to get to a hoarding point but a reasonable amount of goods that you can cull from.  This is the application of that philosophy and you should be familiar with it before proceeding.

Stockpiling requires the player to constantly reinvest their profits and excess gold into more raw materials of whatever product they are making (regardless if they need the materials or not) at the lowest possible overall costs in an effort to predict the profitability of all future products and it's relation to normalizing costs.  The main feature of this inventory acquisition method in game is to prevent price shock for an unlimited supply of raw materials giving the player a pricing advantage and the ability to determine when they should reduce and decrease exposure.  Liquidation occurs when the market's demand for their end product has depleted or is forecast to become obsolete.

There are many downsides to stockpiling and I want to point out some first before I go into the benefits:

• Inventory carrying cost is translated to loss of use of the gold
• Prices can fluctuate causing you to be stuck with an excess inventory of raw materials
• Management of your materials - you have to store them somewhere and keep track
• A never ending supply of materials that you may never use due to end product demand
• Add-on calculations are no longer entirely controlled by add-ons, you have to heavily monitor the flow of material usage (more human intervention)
• A requirement to liquidate ahead of looming price reduction
• Research required to adequately determine the trends in pricing, including their historic limits and future demands
• You MUST be a value added reseller of items to see the true benefit, not a flipper or commodity trader

This method is for those that are in the long game, or those that aren't looking for quick bucks but a consistent and high income over time.  You are running your AH activity like a small and profitable business and not a stock market.  This also insures that you aren't having to engage in pointless camping when you have other IRL or game things to do (raid, pvp, etc) and can log into a mule 2-3 times a day to collect money and repost your products (you also stockpile a high turning inventory of finished goods, but that's for another day). 

This method of inventory acquisition in a perfect world (of Warcraft) demonstrates what happens when you remove all of the real world considerations of JIT, with the exception of unlimited resources to purchase more materials.  The materials do not spoil, there's no decay, prices tend to settle within a certain range, so why would you not stockpile constantly?

I have snatch lists of everything I use and make purchases consistently of items that are at levels I researched and determined were reasonable.  On my server I essentially reset the prices to higher levels in many goods purely because I buy everything within a range (Gold cost averaging).  If I can guarantee my costs today, then when prices go up due to a patch, shortage, or ban of bots, I'm holding a 1 month supply of my materials and can really cash in at that point, or consistently post at reasonable profit margins and always make my required 20-50%.  Should prices temporarily dip below my required margins because a person is farm crafting (selling items at unreasonably low prices mostly because they farmed the materials) I can afford to pull out of that market segment and proceed to continue buying raw materials.  When the person eventually leaves the market I've insured I will be able to resume pricing at my ROI.

Notice I mentioned a 1-month supply.  While I obviously don't count my goods one by one, I have forecast my sales so that I have a rough idea of exactly what amount of supplies I need to maintain at all times because I have sales history data for my server that I've experienced.  1 month is my number mostly to keep myself sane.  Using this method to it's absolute most efficient level you can easily offload those products that may not be of use to you and you won't have to wait around very long to be completely liquidated in that line again.

For some items I tend to keep a 1-week supply on hand, and this is due to severe price fluctuation in the market.  These items would obviously be higher dollar materials like Sha Crystals and Blood Spirits which have a high chance of seeing a price collapse due to duping.  At present I can eliminate my entire Sha Crystal supply (generally 300-400) within a week because this is the demand I have witnessed because of my own sales.  Should the price collapse, I can begin gold cost averaging my stockpile and reduce my snatch pricing to a lesser amount that will yield a lower supply allowing me to clear inventory and make room for new prices.

Anyone who stockpiles can typically be overheard muttering "I need more space" a thousand times a day.  I personally have 2 accounts and 4 guild banks to store all the junk I buy, and this doesn't include the mail I'm constantly having to cycle and process.  I have mail mules who's sole job is to hold items for 30 days, after which time the items will bounce back to me for processing.  This can be time consuming, but this is also why addons like TSM Mail and Postal are utilized heavily by the stockpiling community.  My chief crafters hold their own banks, which gives me 7 tabs of materials I want immediate access to (cloth being a culprit here).  If you don't have the means to acquire your own guild banks yet, you should work towards this as soon as possible.


These are my thoughts on the two different sourcing techniques, and I encourage you to comment here or contact me here.  I will be revisiting them over time, but you are always welcome to ask as your question may be something others wish to understand more.


Tip of the week:  ABB - Always Be Buying (with all due respect to GlenGary Glen Ross)

Thanks for stopping in!

Love What You Do

Last time when I waxed philosophical, I went over the Investment Mentality, which is part of my series on how you should approach game economies.  I personally believe you should develop a mindset if you're going to be successful, and I'm sharing an appropriate mindset.  In a recent forum topic I mentioned three things to being successful:  Patience, Consistency, and Creativity.  Argalin added "Passion", which in retrospect is probably the most critical for long term success.

I've been around some top end gold makers over the years, as well as some top end producers in real life, and collaborated with them on what they're doing that the others aren't doing.  It really does come down to being passionate about what you do.  That word has been a buzzword for a while now in the sales world because of what it means.

Passion is a term applied to a very strong feeling about a person or thing. Passion is an intense emotion compelling feeling, enthusiasm, or desire for something.  Thank you, Wikipedia, I couldn't say it much better.  It's a prime mover of motivation. 

People have a passion for...  winning, competition, wealth, success, love, charity & giving, sports, a hobby, music, etc.

When I was making a transition from one industry to another, I enlisted the help of a consultant.  We ran down my list of interests and he asked "Are any of these a passion?  If so, you should forget what you're considering and work with any one of these interests for the rest of your life, and it will never feel like work."  I had never thought of it like that before, my dad was an accountant who hated what he did but it fed his family.  He made sure that I had all the opportunity possible to pursue what I wanted to do, and what I wanted to do was help other people.

We all know people in our workplace or schools or even within our own families that approach what they do as "just another day" or "just a paycheck".  Here's a sure way to tell if someone's really passionate about something:  Would they work for free just to do it?  "I would pay them to work here if it came to that!" - told to me buy the number one national producer in a company I was working for.  That seems crazy, doesn't it?  But the person was so passionate about what they did they looked at it as their meaning in life.  It's a rare trait and the reason that they invented things like "President's Circle" and "Top Producers Club" and the same people seem to get the awards every year.


Great, Zerohour, we've determined you're off your rocker trying to compare real life to a hobby.

Not exactly, hobbies are often passions.  This has everything to do with your motivations and what will make you a great producer in the world of online gaming economics.  Hobbies often teach people real world lessons and expand your mind and horizons.  I can drop into any online game, apply my passion to succeed in the economic aspect, and come out ahead very quickly - I've done it for the past 13 years and it's one of the primary reasons I pick up a game.  I have the motivation to at least be successful in everything I attempt, I don't like to lose.

Look at raiders - why are less than 0.1% of the game's population completing relevant upper endgame content so quickly in a game that becomes tiresome for the majority, even though these recruit different people to their roster constantly?  PvP has the same mindset - less than 0.5% of the players in that will see the ultimate title that even step into the arena, and only one group is given the highest title?  Outside of the people screaming "carried" and "no-life" I would bet that they are extremely passionate about doing it perfectly and getting the job done.  The same would apply in what the elite in the gold making arena do everyday.  Those that are truly passionate about it do it for the love of doing it, and not to buy something or just pay for things.

I feel the same way about designing new systems, making new discoveries, and doing what it takes to get the job done efficiently, even if it means something others would regard as being boring, terrible, or awful.  (Funny how this compares so well to real life, "Work?  What?  Screw that!")  It will all inevitably enhance my system and continue my drive to collect as much pixelated currency as possible, with nothing to spend it on.  Remember, I collect it for the sake of collecting it.

Is gold production a passion for you?  Or a means to an end?  If it's simply a means to an end, then you're probably going to fall into the camp that is more interested in getting it done very quickly.  I don't appeal to the get-rich-quick crowd (I never have), more often than not they are one trick ponies, or can do one thing really well but they have no sustaining power and engage in very time consuming activities.  What I deal in is a long term approach that affords me more time away from the game while pulling incredible numbers, giving me a very consistent income and worry less about frustration and defeat and doing what everyone else is doing. It's a marathon, not a sprint.

I don't worry about my competition in any game for very long because I know that the majority haven't the passion to be incredibly successful, nor are they going to stick with anything for very long.  They run out of steam and suddenly they stop posting.  They hit an amount they like and get bored.  They probably will dip in and out of the market, but those of us with the drive and passion will continue and we will deal with them when they return. 

At the end of all things, be passionate about what you do and the money will always follow.

And for the week's wrapup, not too hot this week.  We need a patch to get things going again:

Thanks for stopping in!